Trading Away Secrets

As we've said, the Chinese will buy what they cannot steal, and we are all too willing to sell it to them for short-term gain. To do business in China, companies must share their proprietary technology with the Chinese. As a price for selling its cars there, General Motors, now a subsidiary of the U.S. government, had to share its technology with a Chinese competitor, SAIC Motor Corp.

We have seen the harmful effects of the transfer of "civilian" technology when we aided China's early space efforts. After the failed launch of a satellite built by Loral Space & Communications Ltd. and attached to a Chinese rocket in February 1996, Loral provided 200 pages of data to China's Great Wall Industry Corp. to correct the guidance system problems of their Long March rockets, which blew up 75% of the time.

A May 1997 classified Pentagon report concluded that Loral had "turned over expertise that significantly improved China's nuclear missiles" and that as a result "United States national security has been harmed."

According to the Pentagon, the technology that improved the Long March satellite launcher has also made the Dong Feng ICBM series more lethal.

Technology is fungible and can be used for good or ill. Whether enabling a future competitor or potential combatant, its transfer can come back to bite us.

Technology Transfer: During the visit of China's president, and as China's new stealth fighter takes to the sky, America's top jet engine manufacturer agrees to provide Beijing with state-of-the-art aircraft technology.

The aircraft industry remains one of America's strongest manufacturing sectors, providing needed jobs and industrial sales. Already buffeted by the heavily subsidized European Airbus, it may also face stiffer competition one day from a Chinese behemoth buying what American technology it cannot steal.

General Electric plans this week to sign a joint-venture agreement under which it will share its most sophisticated airplane electronics, including technology from Boeing's 787 Dreamliner, with state-owned Aviation Industry Corp. of China, or Avic.

The agreement will supply the Chinese Comac C919, which is challenging Boeing and Airbus in the market for single-aisle jets with more than 100 seats. The C919, expected to carry up to 200 passengers, is intended to compete with Boeing's 737 and the Airbus 3200.

Analysts don't expect many sales outside of China. But the deal provides the base for a Chinese commercial aircraft industry expected to eventually challenge Western giants. China has surprised many in its ability to compete with the West in many areas.

Avionics are electronics that control an aircraft's basic in-flight operations. The risk is that in exchange for short-term sales, however significant, GE is providing a future industrial competitor with technology that also has military applications.

China recently rolled out its version of our fifth-generation F-22 Raptor fighter. Critics have said the Chinese J-20 will be in need of better avionics and more powerful jet engines to fulfill its ominous potential.

The GE deal supposedly forbids transfer of any technology to military applications. The joint venture to be headquartered in Shanghai will occupy separate offices from Avic's military division, and the computer systems involved are said to be incapable of transferring data to that division. Anyone working on the project is barred for two years from working on Avic's military projects.

Yet China's disrespect for intellectual property rights is legendary. So is its ability to hack into and retrieve information from computer systems worldwide. Paul Kurtz, who served on the National Security Council in both the Clinton and Bush administrations, recently spoke before the first open hearing on cybersecurity held by the House Permanent Select Committee on Intelligence.

Kurtz put industry's annual loss of intellectual property due to hackers at more than $200 billion annually. "American industry and government are spending billions of dollars to develop new products and technology that are being stolen at little or no cost by our adversaries," Kurtz said. "Nothing is off-limits — pharmaceuticals, biotech, IT, engine design ... weapons design."

As we've said, the Chinese will buy what they cannot steal, and we are all too willing to sell it to them for short-term gain. To do business in China, companies must share their proprietary technology with the Chinese. As a price for selling its cars there, General Motors, now a subsidiary of the U.S. government, had to share its technology with a Chinese competitor, SAIC Motor Corp.

We have seen the harmful effects of the transfer of "civilian" technology when we aided China's early space efforts. After the failed launch of a satellite built by Loral Space & Communications Ltd. and attached to a Chinese rocket in February 1996, Loral provided 200 pages of data to China's Great Wall Industry Corp. to correct the guidance system problems of their Long March rockets, which blew up 75% of the time.

A May 1997 classified Pentagon report concluded that Loral had "turned over expertise that significantly improved China's nuclear missiles" and that as a result "United States national security has been harmed."

According to the Pentagon, the technology that improved the Long March satellite launcher has also made the Dong Feng ICBM series more lethal.

Technology is fungible and can be used for good or ill. Whether enabling a future competitor or potential combatant, its transfer can come back to bite us.

See Also

Leadership: Among the world's gamier states, there seems to be a new status quo: Kill your opponent. The murder of Boris Nemtsov is the latest such barbarism. It all suggests a void from the U.S. as leader of the free world.The brazen broad-daylight assassination of Nemtsov, a former Russian vice ...

Economy: In his weekly address, President Obama railed against Wall Street for giving "bad advice" that costs American families billions a year. OK, but what about his bad policies that have cost them far more?The president used his precious radio time to lash out at financial advisers for mistakes ...

Cities: The problem with socialism, Margaret Thatcher once noted, is you eventually run out of other people's money. In progressive Chicago, that's hit home as Moody's has cut its credit rating to two grades above "junk."Chicago's finances are staggering under the weight of an unfunded pension ...

Racial Politics: Attorney General Eric Holder complains that the U.S. needs a "lower standard of proof" to enforce civil-rights laws. Standards have already sunk under his "disparate impact" witch hunt. How low is enough? In an exit interview with Politico.com, the outgoing AG asserted, "Some ...

We recently launched the Committee to Unleash American Prosperity with the goal of persuading the presidential hopefuls in both parties to focus on the paramount challenge facing our country: slow growth and stagnant incomes. Faster growth isn't just needed to raise the living standards of ...

Select market data is provided by Interactive Data Corp. Real Time Services. Price and Volume data is delayed 20 minutes unless otherwise noted, is believed accurate but is not warranted or guaranteed by Interactive Data Corp. Real Time Services and is subject to Interactive Data Corp. Real Time Services terms. All times are Eastern United States. *Reflects real-time index prices.